The budget delivered this year sends a clear message about India’s long-term priorities. It highlights where the country intends to position itself in the evolving global economic landscape and how it plans to balance growth ambitions with macro stability. A key theme is a sharper push towards future growth engines. Long-term policy backing for data centre infrastructure and a renewed thrust on nuclear power signal India’s intent to build strength in digital capacity and ensure a credible energy transition. Alongside this, the emphasis on critical and rare-earth minerals reflects strategic thinking around supply security, manufacturing resilience and reducing import dependence in an increasingly fragmented global order.

The budget maintains a balance between aspiration and stability. Continued fiscal discipline, structural reform momentum and steps aimed at moderating speculative excesses in markets point to a sustainable growth path rather than a short-term stimulus approach. The broader direction is forward-looking; focused on strengthening the foundations for India’s next phase of economic evolution rather than chasing near-term outcomes.

The sustained policy thrust on MSMEs and domestic manufacturing also stands out. Initiatives aimed at improving formalisation, strengthening credit frameworks, and enabling smoother receivable financing mechanisms can reduce structural bottlenecks for smaller enterprises. Combined with production-linked incentives and supply-chain localisation efforts, these steps support capacity creation, employment intensity, and a more resilient manufacturing ecosystem over the medium term.

From a market perspective, global equities have outperformed India over the past year. Indian equities now appear more reasonable on a relative valuation basis compared with several global markets. While we are incrementally constructive on equities, this is not a phase for aggressive positioning given that markets are yet not cheap. Our primary framework for investing is asset allocation-based approach with a higher equity tilt than a year ago. Within equity, investors may consider equity strategies with flexibility to move across sectors and market capitalisations.

Within equities, large-caps appear better placed on valuations. Mid-caps continue to look expensive, though limited free float has so far prevented meaningful corrections. In small-caps, froth has reduced and euphoria is no longer there, but cycles here tend to be much longer than what investors think of, suggesting systematic investment rather than lump-sum exposure. Indian markets will be influenced by global developments, in the US, where valuations remain elevated. If global markets stay stable, India could see a favourable year. In the event of a global correction, Indian equities may still hold up better on a relative basis. Precious metals such as gold and silver have delivered strong returns, but investors should be cautious about standalone allocations.